Abstract
This paper studies market segmentation that arises from the introduction of rent control. When a part of the market remains unregulated, theory predicts an increase of free-market rents due to the misallocation of households to dwellings. To document this mechanism empirically, we study a large-scale policy intervention in the German housing market. We isolate the misallocation mechanism by exploiting temporal variation in treatment dates in an event study design. We find a robust positive spillover effect of rent control on free-market rents. Moreover, mobility of renters living in rent-controlled units decreased. [91 words]
| Original language | English |
|---|---|
| Article number | 103513 |
| Journal | Journal of Urban Economics |
| Volume | 134 |
| Number of pages | 22 |
| ISSN | 0094-1190 |
| DOIs | |
| Publication status | Published - 03.2023 |
Bibliographical note
Publisher Copyright:© 2022 Elsevier Inc.
Research areas and keywords
- Economics
- Misallocation
- Price controls
- Rent control
- Spillovers
ASJC Scopus Subject Areas
- Economics and Econometrics
- Urban Studies
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